Monitoring the Replacement of the F-16

The coalition agreement of the Rutte/Verhagen government states that apart from a second JSF aircraft in 2011 no further JSF aircraft will be purchased. The final decision on which aircraft will replace the F-16, how many replacement aircraft will be needed and the maximum procurement and operating budgets has been postponed until after the current government's term of office. The government took and announced steps in 2010, however, that further strengthen the case for the JSF. The purchase of a second aircraft is an example of this. Another example is the supplementary agreement that the state and industry concluded on industry's involvement in the development of the JSF. There is a risk of the JSF's standing as the successor to the F-16 being further strengthened in 2011. This would influence future decisions and possibly increase the potential withdrawal costs.

The postponement of the final decision also means that additional measures may be needed to continue operating the current F-16s. The necessary investments have not yet been estimated and will depend in part on the future ambitions set for the armed forces. The same is true of the operational consequences of the longer operation of the current F-16s. The Ministry of Defence is currently studying the necessary investments.

In the meantime, 2010 saw considerable delays and cost overruns in the international JSF programme. Partly because these developments could not be translated directly to the situation in the Netherlands, it took some time before the House of Representatives was informed of their consequences. The minister informed the House of the latest cost estimate for part of the F-16 Replacement project on 2 December 2010. The estimates of the operating costs, however, were not updated in his letter. According to the annual report for 2009, they amount to €10 billion. The minister also notes in his letter that the US defence ministry is working on a new cost analysis.

In the annual report of April 2010, the Ministers of Defence and Economic Affairs state that the annual report's information value is limited because the consequences of restructuring the international JSF programme are not known. Furthermore, they note that the 2009 SAR report (with cost information on the JSF programme provided by the US defence ministry) had not been published when the annual report was prepared.

Longer operation of the F-16
We recommend that the Minister of Defence in any event explain the financial and operational consequences of the continued operation of the F-16 in the spring policy letter to the House of Representatives. He should also consider the consequences in the light of the review of the F-16 Replacement project.

Cost developments in the JSF programme
We recommend that, once the US defence ministry publishes the new cost analysis, the Minister of Defence provide the House of Representatives with timely and full information on the costs and consequences. We also recommend that, given the government's intention of saving €100 million per annum on JSF operating costs, the minister inform the House promptly and fully of the consequences of the new estimates of operating costs. We further recommend that the minister consider these new estimates in the defence-wide review that he will report upon in spring 2011.
We recommend that the ministers and the House of Representatives together decide what the best moment is for a timely and up-to-date annual report given the information cycle in the international JSF programme.

Follow-up measures
The measures that are being taken now will influence the Netherlands' future decisions on the F-16 Replacement project. Before they take further measures, the government and the House of Representatives would be well advised to establish the relationship between the Defence Review published in 2010, the government's proposed economy measures, the ambitions of the armed forces and European developments in the field of defence. The postponement of the final decision offers an opportunity to do so.

The Minister of Defence responded to our report on behalf of himself and the Minister of Economic Affairs, Agriculture and Innovation and the Minister of Finance on 22 February 2011. He undertook to inform the House of Representatives of new cost information when it becomes available. Regarding the publication date for the annual report, he wrote that if the House thought it desirable the reporting period could be extended and submission of the annual report could be postponed so that the US defence ministry's cost information could be included. He also wrote that he was preparing measures that would make the armed forces future proof and affordable in the longer term. He would submit a policy strategy to the House in March. It would consider the review of the F-16 Replacement project, the project budget and the number of aircraft necessary in the light of the desired ambitions, the Defence Review and relevant international developments. Operating costs and the consequences for the F-16 would also be considered.

The Netherlands currently operates F-16 fighter aircraft that, according to the Ministry of Defence, will have to be replaced in due course. With a view to their replacement, the Netherlands has participated since 2002 in an international programme to develop a new fighter aircraft, the Joint Strike Fighter (JSF). The JSF is a possible replacement for the F-16 in the Netherlands. The Netherlands' participation in the international JSF programme is part of the F-16 Replacement project, which has had the status of Large Project since 1999. We have been informing the House of Representatives of developments in the replacement of the F-16 and the procurement of the JSF each year since 2005. Our reports also consider the secondary goal of the F-16 Replacement project, namely the involvement of Dutch industry.